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University of Minnesota to hire consultant to review administrative costs

By Mila Koumpilovamkoumpilova@pioneerpress.com

Posted:
01/11/2013 12:01:00 AM CST

Updated:
01/11/2013 10:02:16 PM CST

University of Minnesota president Eric Kaler in his office at Morrill Hall on the University of Minnesota campus. (Pioneer Press: Jean Pieri)

The University of Minnesota will hire an outside consultant to review its administrative structure and costs.

The decision was announced Friday, Jan. 11 -- days after U President Eric Kaler received a letter from two key DFL legislators calling for such a review.

The letter, from Senate Majority Leader Tom Bakk and Terri Bonoff, chair of the higher-education finance committee, was inspired by a recent Wall Street Journal article on growing overhead at the U that rekindled long-standing questions on the issue.

In a news briefing outlining the university's legislative priorities, Kaler said bringing in someone to do the review will give it "external validation." He said he is not sure yet if the report's cost will reach the $50,000 threshold that would require bidding out the job.

"(The university) is a jewel to the state of Minnesota, and I'm committed to running it as effectively and efficiently as I can," Kaler said.

Kaler's focus at the briefing was a proposal to freeze tuition and fees for resident undergraduates, now at about $13,500. To accomplish that, the U is asking for an extra $32.6 million from the state over the next two years. In all, the university has requested a $91.6 million, or 8.4 percent, increase over the current biennium.

Bonoff, of Minnetonka, praised the president's openness to gauging administrative costs. She first pitched the idea in a Monday meeting with Kaler after finding out other Big Ten schools were working on similar studies that will let them compare costs.

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"Instantly, he said to me, 'Not only am I willing to do it, but I really want to do it,'â " Bonoff said.

They also agreed the U should bring in an outsider to do the report, she said. "It is my belief that we're not always the best judges of ourselves."

At the briefing, Kaler pushed back against some of the criticism, saying a look at growing payroll costs must more fully account for rising student counts and research grants. By the U's latest count, it has added about 650 administrators over the past decade while enrollment increased by 9,000 students.

But he said, "I am not really interested in defending the status quo. I am interested in talking about how we'll get better going forward."

The university's $1.1 billion biennial budget request includes a commitment to trim administrative spending by 5 percent over two years, and Kaler already has made some cuts. He said making the university leaner is not a process "that moves as fast as I'd like it to be. It will probably take the full biennial cycle to point us in the right direction."

He also said the university will revisit a 5-year-old strategy to keep out-of-state tuition low. That approach has made the U something of an outlier in charging nonresidents only $5,300 more than Minnesota students.

Bakk, of Cook, and Bonoff have asked the university to turn in an interim report on operational costs by March, with a more in-depth analysis later on.

"I don't want this matter to become a distraction from the broader conversation about the importance of our investment in higher education," Bonoff said.

She said it is too soon to speculate about whether the state will be able to come through with the increase the U seeks. But she voiced some discomfort with the idea of tying extra dollars to a tuition freeze -- a goal she wants the university to pursue relentlessly even if state funding stays flat.